Kind of a Big Deal

In an Internet retail, post-Benny’s world, Ocean State Job Lot relies on its value and values

Posted
Monday, July 23, 2018 4:22 pm

Photo courtesy of Ocean State Job Lot

By Bob Curley

What exactly is a “job lot”? Invariably, it’s the first question people ask about Ocean State Job Lot (the second being, “Where do you get all this stuff?”). But what Job Lot isn’t is also important to the story of this Rhode Island institution, which recently celebrated 40 years in business and has become one of the most successful discount retailers in New England.

A job lot is an industry term for merchandise grouped together for purchase or sale, often “stranded inventory,” in the words of Ocean State Job Lot marketer David Sarlitto, who also heads the company’s charitable foundation. What the company adamantly is not is a salvage operation like its one-time rival, Building #19, which fell to bankruptcy in 2013.

“There’s a misconception that our goods are old or low-quality,” says Alan Perlman, who co-founded the company with his brother, Marc, and business partner Roy Dubs in 1977.

Nor does Job Lot only sell closeout goods, although that is part of the business. For every overrun or lot of products that wasn’t selling fast enough for manufacturers on Job Lot’s shelves, you’ll also find first-quality items that the company’s buyers — including a team based in China — simply ferreted out at a good price at a trade show or bought directly from the manufacturer, cutting out the middleman and passing on the savings to customers.

“It’s difficult to run a store with only closeouts,” says Perlman, “I’m less concerned about whether it’s an import or a purchase or a closeout, than whether it’s a value.”

The first Ocean State Job Lot store opened in North Kingstown in 1977, and the company slowly but steadily expanded into Connecticut, then Massachusetts, New Hampshire, Vermont, Maine, New York, and New Jersey. Today, the company has 131 stores, $700 million in annual sales, and a 1.2-million-square-foot distribution center at Quonset Point. Just 16 of the stores are in Rhode Island, so increasingly it’s the “Ocean State” part of the name that’s more puzzling to consumers than “Job Lot.”

How those stores are organized is an important part of Job Lot’s success story: unlike other retailers or supermarkets, which map out every square foot of their retail space and charge companies hefty fees for shelf space, “a good chunk of our space is devoted to deals,” says Sarlitto. “It’s almost like a store that floats.”

That flexibility allows Job Lot stores to stock a broad and eclectic variety of goods depending on what the company’s buyers have been able to acquire, from bird seed and aluminum pans to gazebos and kayaks.

There’s an interesting origin story behind almost every item you’ll find in a Job Lot store. Buyers got a big lot of Wise potato chips after the snack food company decided to change a package size; Job Lot took both the chips and rolls of foil bags imprinted with the old serving size at a big discount. Job Lot undersells Stop & Shop on Polar Soda because it uses its own trucks to pick up the cans of flavored seltzer and soda from the beverage company’s Worcester manufacturing plant. And you may recognize some of the rugs from Building #19 — Job Lot bought their stock of floor coverings during bankruptcy proceedings.

Seasonal goods also make up a huge portion of Job Lot’s inventory. Often, buyers will acquire seasonal goods from manufacturers offseason — summer goods in October, November, or December, for instance — and a company that views throwing anything away as sacrilege needs the ability to store items like pool chemicals from year to year, so they can be restocked for when the warm weather arrives and people start thinking about swimming again.

Job Lot’s mammoth Quonset distribution center has 44-foot ceilings and storage space for 88,000 pallets of goods. Some merchandise, like food, moves in and out quickly, thanks in part to a 2.5-mile-long conveyor system (picked up cheap, of course — it was originally purchased by Target as part of a failed foray into Canada).

On the other hand, Jeff Enright, Job Lot’s director of supply chain logistics, likes to show off the 250 pallets of belts that have been sitting in dusty boxes in the distribution center for the last seven years. “If we can’t sell them all in one year we’ll bring them back, because it was a good deal,” Enright explains. Eventually, what’s left will likely get donated to charity.

To understand Job Lot’s extensive charitable giving program, start with the fact that Sarlitto’s background is in marketing, not philanthropy. The Ocean State Job Lot Charitable Foundation has no formal staff, with its giving program fully integrated with the company’s retail operations. “The same skills the company uses to buy clothing or gazebos or kayaks are used to support philanthropy across eight states,” says Sarlitto.

Charities the company works with — primarily food banks, but also veterans’ and health care organizations — can place “orders” for needed goods through Sarlitto, who also works closely with Job Lot buyers and manufacturers to source items like olive oil, peanut butter, and healthy cereals that food charities need for their clients.

That’s how Job Lot came to deliver truckloads of gourmet cheese — creamy Camembert, rind-covered Brie, nutty Gruyere, and more — to local food banks last year. Cheese isn’t something Job Lot normally buys — it lacks both refrigerated trucks and store shelves — but the manufacturer knew how closely the company works with groups like the Greater Boston Food Bank and the Rhode Island Community Food Bank and offered up the goods.

“This cheese normally sells for $6 to $25 a pound; it was all within the sell-by date, but the manufacturer had too much stock on hand and was looking for a way to deplete it quickly, so we bought it at a fraction of the price and donated it,” says Sarlitto, who arranged for the cheese to be drop-shipped directly to the charities’ refrigerated warehouses.

The cheese story perfectly illustrates the kind of creative purchasing that Job Lot buyers do every day. “We’re not afraid to try anything,” says Marlene Bellini, the company’s senior merchandise manager and buyer. Sometimes, that means buying fidget spinners directly from Chinese factories just as that fad hit its peak; other times, buyers will even pick up pallets of unidentified goods from trusted sellers and figures out how to sell the stuff only when the boxes are opened.

Job Lot has thrived even as old rivals like Building #19, Benny’s, and Worcester-based Spag’s have fallen by the wayside and national competitors like Big Lots have arrived in New England. “We’re opportunistic in everything we do,” says Enright, right down to buying warehouse storage racks at 16 cents on a dollar, and using secondhand radios acquired from an offshore drilling company after the Deepwater Horizon disaster in the Gulf of Mexico.

The company’s strong roots in the communities it serves are reflected in one of its familiar charitable giving programs, which saw 30,000 winter coats donated to homeless veterans. “We got a good deal on Totes coats and put them on display for customers at $39.99,” Sarlitto recalls. “They could get a Crazy Deals card for the same value or could give it back. I’d say 99.9 percent gave it back — some people would take their Crazy Deals gift card and put it in the pocket of the coat, or turn around and use it to buy other accessories like hats and scarves.”

“Generosity feeds on itself,” he says.

Finally, Job Lot succeeds because of the relationships it has built with suppliers over the course of four decades, buyers who are empowered to take chances, and a fierce dedication to providing good deals to customers. Pointing to warehouse racks full of the kayaks that have become a signature seasonal item at Job Lot stores, Enright explains, “We have to convince people that what we put out there is a good value, not that it’s a great kayak.”

“We consider our integrity more important than any one deal,” says Perlman.